Ellison recalls Reagan on the 'Third Rail' of American politics

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November 28, 2012 - 1:54 PM

Minnesota Democrat Keith Ellison and U.S. Rep. Raul Grijalva of Arizona, co-chairs of the Congressional Progressive Caucus, delivered a letter Wednesday to every House Republican office urging them to listen to President Reagan and take Social Security off the table in current negotiations about the year-end “fiscal cliff.”

The letter quotes Reagan from a 1984 presidential debate:

“Social Security has nothing to do with the deficit. Social Security is totally funded by the payroll tax levied on employer and employee. If you reduce the outgo [payments] of Social Security, that money would not go into the general fund to reduce the deficit. It would go into the Social Security Trust Fund…Social Security has nothing to do with balancing a budget or erasing or lowering the deficit.”

A host of experts, however, have challenged the claim that Social Security doesn’t contribute to the deficit.

While that might have been true in Reagan’s time, it’s a suspect argument today. By most estimates, Social Security passed the tipping point between income and outgo in 2010. It now relies on annual infusions of borrowed federal funds to pay benefits.

Some of that money is owed to Social Security because of government borrowing from years past, when the system was flush and Congress could use it as a piggy bank to pay for other things. But that doesn’t change the fact that Social Security is no longer funded by payroll taxes alone.

It’s a predicament made worse by the retiring Baby Boom generation -- and the temporary “payroll tax holiday,” which is also up for discussion as part of the fiscal cliff talks.

Where liberals are on more solid ground is in arguing that Social Security is not nearly as big a drag on the budget as Medicare and Medicaid. But Social Security’s own trustees reported earlier this year that the program’s trust fund will be depleted by 2033, the point at which either scheduled benefits would have to be cut or more money borrowed.